In an effort to protect 155 residents of Rancho La Paz mobile home park in Fullerton from the extreme rent increases imposed by the park’s new owner, Fullerton city council voted at their July 16 meeting to agendize a temporary rent hike moratorium and a tenant-based rent assistance program.
The council chambers were filled with senior residents of Rancho La Paz, many of whom are facing an uncertain future, following an agreement with John Saunders, who bought the park earlier this year, and has proposed rent increases of over 80% over the next six years.
Residents, industry lobbyists, representatives of Mr. Saunders, an economist, a lawyer, and others weighed in on the discussion of how to best protect these residents, most of whom are on social security and fixed incomes.
Before public discussion of the issue, Fullerton’s Neighborhood Services Manager Rebecca Leifkes gave an overview of some of the tools council may consider to address this issue.
Among these options was rent stabilization (aka rent control), which council discussed but took no action on, and to bring back a federally-funded Tenant-Based Rental Assistance Program.
Saunders has also offered a “safety net rent subsidy program” to be offered to homeowners within the park who cannot afford to pay some or all of the rent increases, which has received a lukewarm response from residents, who say that the requirements are unrealistic and would not apply to many of them.
Rancho La Paz resident June Perez said she went door to door to do a survey for the number of people who would not be able to make their house payment without help. Of the 30 on her street, 20 of them said yes.
She said that Saunders’ subsidy program “is not adequate or fair” and it is only for two years.
Ruth Ann Markyna, a resident of Rancho La Paz, said that Saunders’ rent subsidy program asks homeowners for their children’s names and employers, to determine if they can help pay the rent increases, as part of the eligibility process.
She said there’s been “a lot of talk about the owner’s investment and the profit he’s making. I didn’t hear any comments about the residents’ investment. What about our investment? Every time the rent is raised, we lose equity in our investment.”
Todd Harrison, another resident of Rancho La Paz, urged council to enact rent stabilization.
“Unless you act before our 45 days are up (October 1), I and many others at Rancho La Paz will have to sign long-term leases with a 55% rent increase in the first three years. Those of us on fixed incomes cannot survive this increase. There is just enough time for you to save us if you start taking action tonight,” Harrison said.
Rancho La Paz resident Rose Mary McLeod pointed out that, unlike traditional renters, mobile homeowners actually own their homes and pay rent for the land on which it sits.
“There’s nothing mobile about our home. It would cost many thousands of dollars to move it,” she said.
Council member Jan Flory asked McLeod if she had applied for Saunders’ subsidy program.
“Not yet, because we’re about 3 years away from needing it. We don’t qualify yet,” she replied, “If God is merciful to me, maybe my husband and I won’t live until we need it.”
Rose Mary’s husband Don, a 90-year old veteran with a service dog, said, “I never thought that I’d become another homeless veteran…I had hoped and thought that having this place in the manner that we did in Fullerton would give me some personal contentment in my final years. And I see that now being whisked away from me.”
Joan Banks said that three weeks after she and her husband bought their home in Rancho La Paz, they got the letter that the park had been sold, and were faced with extreme rent increases.
“This is not the way we intended to spend our golden years. I’m kind of curious about what kind of a man buys a senior park knowing he has to destroy the lives of residents to make a profit,” she said.
Mary Jo Baretich, Vice President of the local area of the Golden State Manufactured Homeowners League (GSMOL) urged council to adopt rent stabilization.
“The fragile and vulnerable seniors are being threatened with economic eviction and outlandish rent increases causing the loss of their homes and everything they have saved for all their lives,” she said. “A temporary moratorium on rent increases is one option that has worked successfully throughout the state while the final rent stabilization ordinance is prepared and reviewed.”
Baretich pointed out that there are currently 110 cities and counties in the state that have rent stabilization ordinances.
“A fair rent stabilization ordinance still allows the park owners a fair return on their investment and enables the homeowners to be able to afford the homes they spent their life savings on,” she said.
Julie Paule, a representative of the Western Manufactured Housing Communities Association (an industry lobbyist), said that her organization is against “rent control” which she called “price fixing of housing costs” that is expensive to enact and opens the city up to lawsuits.
Mayor Silva asked her, “In your industry, when someone buys a mobile home park, are these types of increases typical?”
She responded that “the initial increase was atypical” but that the revised 19% increase in the first year “is more typical because usually it includes the property tax reassessment to be front-loaded.”
Clay Haig, manager of Country Place Mobile Home Park in Fullerton, spoke against rent control, citing the concept of a “fair rate of return” on property owners’ investments.
“There is no free market anymore when there is a rent control ordinance because government is imposing a public policy on limiting income, but not limiting expenses,” he said.
Dr. Craig McLaren, an economist from UC Riverside, said that the current situation at Rancho La Paz is not a “free market.”
“Generally, under a free market, what you have is many sellers and many buyers, but what’s even more important is that all parties have the ability to negotiate and change negotiations any time they wish,” he explained. “When you do not have a free market condition, you can very often have a parasitic situation called ‘rent-seeking’…you have a speculator, I call him a parasite, who is able to extract more revenue or more resources without having to provide any additional product…Whatever policy you take, I would strongly encourage you to make a clear statement that the way to make money in the city of Fullerton is to earn it.”
Ben Eilenberg, Fullerton real estate attorney whose mother-in-law lives at Rancho la Paz, argued that rent control would actually generate more money for the city because, when seniors sell and move out of their homes to affordable housing (like mobile homes), the property tax for their homes is reassessed, resulting in more revenue for the city.
Susan James, owner of Rancho Fullerton Mobile Home Estates, said that their rental increases occurs once a year and are based on the consumer price index (CPI), and that over the past 5 years, their annual increase has been between $10 to $30. She spoke against rent control, and supported instead the tenant-based rental assistance program.
A representative of Saunders said that “As a result of the subsidy, no resident will lose his/her home due to an inability to pay the increased rent.”
Council Member Flory expressed concern that the rent subsidy program will not be part of the lease agreement, thus residents would not have a guarantee.
Val Donna, a Rancho La Paz resident, said, “I’d like to know the percentage of people who would qualify for the assistance program…I have cancer so my medical bills are high, about a quarter of my income…With the rent increases, we’re just putting the inevitable off.”
Lonny Markyna, another Rancho La Paz resident, echoed this sentiment that, without a guarantee of assistance in the lease agreement, “We’re all gonna be back here in another year.”
Young Shin, resident of Rancho La Paz, said that for the last 8 years, her annual rent increase was $5, and the initial proposed increase under Saunders was almost $400.
“We’re not talking about no increases, but we’re talking about reasonable increases. Be reasonable. At lease give us room to breathe,” she said, “We don’t want to create another homeless situation—taxpayers money goes to that. It’s not worth it. Please help these elderly people.”
Bobbie Magnussen, a representative of GSMOL, urged council to pass rent stabilization. She said that every time a person’s rent goes up $100 in a mobile home park, they lose $10,000 of their property value.
She also questioned Saunders claim that, under the subsidy program, no one would lose their home.
“This was said in Huntington Shorecliffs [another Saunders-owned mobile home park]. Shortly thereafter you had 150 people leave their mobile homes because they could not afford the rent that Saunders was charging them. So please please consider rent stabilization,” she said.
After members of the public weighed in, each council member explained their position in the issue, and what solutions they found acceptable.
Mayor Protem Fitzgerald proposed taking no action. She said that, although she was “astounded and disgusted by the ownership’s immediate actions…I think that the current deal that was mediated provides a fairer, longer amount of time to phase these things in. I find the private subsidy program that the ownership is offering to be reasonable and in fact generous.” She said she does not believe in rent control.
Council member Whitaker initially supported Fitzgerald’s motion to “receive and file” the item and take no action, because he does not believe in government intervening in “a market-based private transaction.”
He said his heart goes out to the Rancho La Paz residents, but “I’m a big fan of the free marketplace and of our power as consumers in deciding where we’re going to make our investments…and the idea of now wanting to create a web of government intervention, I’ve seen that the track record of such is not good at all, and very often that cure does more harm than good in the longer term.”
Council Member Zahra said, “While I feel there are some times where government cannot intervene in the free market, there are times when it should to protect people.”
Zahra said he was concerned, however, about how a rent stabilization ordinance would affect other mobile home parks in Fullerton, as well as the Anaheim side of Rancho La Paz, and that “we need more data” to make an informed decision.
He proposed bringing back the city’s federally-funded tenant-based rental assistance program, and seeing if this could work in conjunction with Saunders’ private subsidy program. He also proposed creating an ad hoc committee to further study the issue.
Council member Flory made a substitute motion to establish a six-month moratorium on any rent increase in any mobile home parks within the city of Fullerton, and appointing an ad hoc committee in the meantime to “brainstorm what a decent resolution to this problem would be.”
Flory called the proposed rent increases “absolutely obscene” and said, “I very much agree with [Whitaker’s] sentiments of not wanting to interfere in market processes, but at the same time, we have to balance people vs. profit.”
“This will be my hope—that the message is sent to Mr. Saunders that there will be a moratorium for six months and during that time he needs to get realistic about the timeline for the return on his investment, and he needs to be realistic about offering long term leases to tenants who have been in this park for so long. And I would keep my fingers crossed that he’s enough of a businessman that he could see the efficacy of talking turkey with the tenants instead of being as dismissive as he has been heretofore,” Flory said.
Mayor Silva seconded this motion.
Zahra cited concern that, if the city enacts a moratorium, Saunders will take away the subsidy program and the mediated lease agreement.
Fitzgerald dismissed the idea of of a moratorium, asking sarcastically, “Why do we limit it to mobile home parks? Why don’t we canvas every renter in the city and ask them what they can afford in three years, to make sure that they continue to be guaranteed the housing they have right now?”
Flory responded earnestly, “The distinction that I am drawing between mobile home parks and apartments is that the mobile home owners have a stake in the purchase of their homes. It is a distinctly different class.”
“My plea is that at least you make the solution proportionate to the problem,” Fitzgerald said, “So now you are interfering with the private property rights and business operation of six mobile home parks because you’re not satisfied with the actions of one mobile home park owner.”
“I take responsibility for that,” Flory said.
Zahra expressed concern that a moratorium would only affect the Fullerton side of Rancho La Paz, and that Saunders may retaliate by raising rents on the Anaheim side.
At this point, the city attorney interjected that, because a rent hike moratorium was not on the current agenda, it would have to be placed on the agenda for the next meeting. Same for creating the ad hoc committee.
Thus, Flory amended her motion to ask that a rent hike moratorium be placed on the next meeting’s agenda.
This motion passed 4-1 (Fitzgerald “no”)
Zahra’s motion to bring back more info on the tenant-based rental assistance program also passed, and will be on the next agenda.
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